Tackling scam: RBI says PNB can spread losses without dipping into reserves

The bank was to make full provision for losses due to fraud in the fourth quarter of 2017-18, according to RBI guidelines

The Reserve Bank of India (RBI) has allowed Punjab National Bank (PNB) to spread its losses of Rs 139 billion over four quarters related to the Nirav Modi-Mehul Choksi fraud, without dipping into its reserves.

“The RBI has allowed us to spread the losses without debiting the amount un-provided for in the March quarter from our reserves,” said a senior PNB executive, requesting anonymity. PNB currently has over Rs 350 billion worth of reserves, the official added. PNB has reported a Rs 139-billion fraud related to letters of undertaking and letters of credit facility availed by group of companies belonging to